Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and on the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010, which cover an industry which is of huge significance not only to the Australian economy, not only for Australian jobs but also for Australian energy security. I have a feeling of deja vu in addressing this matter because it is not the first time this legislation has been before the House. Indeed, I have had the chance to speak on this legislation on several occasions. I am pleased that the government has taken measures to correct a flaw which existed in its original legislation.

The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010 amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to implement policy and technical amendments. The act was last amended in 2009. The Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010 amends the 2003 act to provide transitional arrangements in relation to the phasing out of the pipeline safety management plan levy. The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006. This is a relatively small bill, making a number of minor policy and technical amendments.

In 2008, the coalition supported the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, which amended the Offshore Petroleum Act 2006 to establish a system of offshore titles to authorise transportation, injection and storage of greenhouse gas substances, principally carbon dioxide, into deep geological formations under the seabed. Of course there has been a great deal of talk and not much action in relation to geosequestration from those on the other side, although I did note with interest the announcement of the minister last week where a significant amount of money was awarded to various projects in relation to carbon capture and storage. Interestingly, though, most of that money went overseas. It is of some interest to me that the Carbon Capture and Storage Institute, established with such great fanfare by the previous Prime Minister, has really received no international support of any great matter. In fact, only one country out of the many said to be involved in that institute has actually put any money up. At last count, the Americans, who offered $500,000, did so a few days before they received $6½ million dollars for a project in Texas in the United States.

Serious questions are now being asked about the economic viability of carbon capture and storage. The missing link in all of this, apart from the government’s continued talk and little action, is that the coal industry is going to have to put real dollars on the table. They will not be surprised by that message. Perhaps they will not be happy with it but they should not be surprised by it as it is a comment I have made to them repeatedly in recent times. If carbon capture and storage is to be economically viable, the coal industry is going to have to invest substantial sums of money in it. I am not talking about hundreds of millions of dollars; I am talking about several billions of dollars. Without that support and without commitment from other countries, the concept being championed by the Minister for Resources and Energy in the Gillard government will simply go nowhere, along with the myriad other policies they have announced during their time in government.

In 2009, the coalition considered and supported the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Bill 2009 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009. These bills made minor technical amendments to the act.The main bill also gave the minister power to appoint a commission to undertake an inquiry into factors specific or incidental to a significant offshore petroleum or greenhouse gas storage incident. Unfortunately, I have to say that that was an important step supported by the coalition because of what was then the first incidence of an offshore leak—the Montara well off north-western Western Australia—in some 25 years of exploration and drilling off the coast of Australia.

Montara was an incident which the government and the opposition took very seriously at the time, but little did we know, when that incident occurred, that it was soon to be followed by a huge incident in the Gulf of Mexico. In both cases oil and hydrocarbons escaped uncontrolled from underwater wells. Fortunately in the case of Montara in Western Australia the environmental damage was nowhere near as significant as it was in the Gulf of Mexico. Either way, though, escapes of this type cannot go without significant investigation. Both the opposition and, I am sure, the government will take a very close interest in the findings that come from the inquiries into the Montara and Gulf of Mexico cases.

This amendment to the bill allowed the initiation of the Montara Commission of Inquiry into that uncontrolled release of oil and gas from the Montara wellhead platform in the Timor Sea. It is important that that process be pursued to its completion and that this be done without interference and without politics. The minister has recently stated that the report of this commission of inquiry will be released before Christmas this year and the coalition supports the minister’s delay in releasing that report. It is important that we do not lose any opportunity to follow through lines of inquiry—either ours or the commission’s—and that we do not prejudice in any way any potential action, particularly legal action, by prematurely releasing this report.

But we do urge the minister, now that parliament has resumed in full, to release this report as soon as possible. It is important for everyone involved. It is important for the companies who have a financial interest in this that this matter is resolved. It is important that we complete our lines of inquiry so that we are able to fully explain to the best of everyone’s ability why this incident occurred in Montara, because it is crucial that such incidents do not recur in Australia’s offshore petroleum industry. The potential environmental impact is an issue which has been well canvassed in the media, but the Australian community needs to have confidence that offshore oil and gas exploration can be done in complete safety. So I look forward to the release of that report and, as has been the case to date, we have taken a bipartisan approach with the government to ensure that everything that should be done is done.

The safety levies amendment of 2009 commenced the phase-out of the pipeline safety management plan levy by putting in place a safety case levy covering pipelines. This was to facilitate pipelines being covered under the safety regulations in future, rather than under pipeline regulations. The safety case levy is imposed to recover the National Offshore Petroleum Safety Authority’s—NOPSA’s—costs associated with monitoring safety compliance. NOPSA plays an extraordinarily important role in making sure that there is compliance with the safety rules.

It was intended that the state and Northern Territory regulations would be amended to correspond with the Commonwealth regulations. I am sure it comes as no surprise to the House that this has not occurred. As a result, some safety levy payments due to NOPSA may not be collectable until corresponding amendments are in place. The current safety levy bill therefore seeks to address these issues with transitional measures. I am particularly pleased to see that the government has been prepared to address this problem in its previous legislation.

However, in its previous format the coalition had significant concerns about the bill. My colleagues in Western Australia in particular were very concerned with some aspects of the bill. It seems only reasonable that, with two-thirds of Australia’s offshore oil and gas resources and with about 80 per cent of offshore titles being based in Western Australia, this parliament and this government should take a reasonable interest in the concerns of both the state and federal representatives of that state. We also had significant concerns about the fact that there had not been adequate consultation, particularly with the Western Australian government. There were also concerns that the federal government would be moving, through this bill, to hold the fees for the establishment of a national offshore petroleum regulator, given that at least one state government—as I say, the Western Australian government—has concerns about this proposal and that those concerns are yet to be resolved. In fact there will need to be continuing discussions with both the Western Australian Minister for Mines and Petroleum, Norman Moore, and with the opposition if we are to make progress on that regulator.

We do support in principle the establishment of a national offshore petroleum regulator, but it must be a national, not a federal, regulator—that is, it must have representatives from those states which will be involved in the regulation of offshore petroleum along with the Commonwealth government. It needs to be a partnership and a partnership where we all share responsibility and also share the same aim of making sure that the regulator operates in a way which will produce the optimum outcome. We need to ensure that all states agree with the establishment and operation of the national offshore petroleum regulator.

That is achievable but, along with its inability to deliver, where this government continually fails is in the area of consultation. We have seen a classic example of that recently with the discussion paper—I think it was perhaps a ‘guide to a discussion paper’; it seems to be of less importance everyday—on water management. The Gillard government has the same bad trait that the Rudd government had and that is that it fails to consult. We need to have consultation in the case of the national offshore petroleum regulator. It is an issue that needs to be finalised, but it will not be finalised unless this government consults with all concerned, particularly, as I say, with the Western Australian government.

The Western Australian government has been quite open in expressing its concerns also about the Productivity Commission’s recommendations and the implementation of those recommendations. Since Western Australia’s budget is going to be hit by this measure, identified in this bill as savings to the Commonwealth, it makes sense that its concerns are fully addressed before the passage of this piece of legislation. The coalition, as has always been the case in opposition, is prepared to sit down with the minister and discuss the issues constructively. As the minister knows, my door is always open and we will work to ensure a positive outcome.

Unfortunately, there is much work to be done if the government is to meet its responsibilities in the oil and gas sector. It is particularly frustrating that the government has again delayed the release of its energy white paper which obviously impacts on the oil and gas industry and a whole range of energy resources, not the least of which is electricity. While this legislation today is important to the oil and gas industry, it does, however, highlight the piecemeal approach to energy policy in Australia. The most recent delaying tactic occurred earlier this month when the government fobbed off again the release of the energy white paper with another excuse, this time attempting to pass off an energy efficiency report as a temporary stand-in for the energy white paper. The report is not an energy white paper and does not fill the void created by three years of inaction in this area by the Rudd, now Gillard, government.

Households and businesses across Australia are focused on the rapidly escalating price of electricity, and the federal government has comprehensively failed to provide leadership for the energy sector right across the board—electricity, oil, gas and coal—by dodging its responsibilities to provide the energy policy framework that would be contained in an energy white paper. There have been myriad excuses. Firstly, there were the problems with the ETS, and now the Gillard government is trying to inflict more delays on the sector while its climate change panel deliberates for another year about a potential carbon tax.

The last energy white paper was delivered by the Howard government—in fact delivered by me as the Minister for Industry, Tourism and Resources—in 2004. In keeping with the regular five-year cycle, an updated version is well and truly overdue. There have been enough excuses, enough delays and enough drip-feeds. It is time for the Gillard government to release a comprehensive energy white paper that will address the full range of issues affecting the energy sector.

While I do welcome the changes to the legislation before the House today, and the opposition will support the bills, the government must accept and address that its day of reckoning on energy matters is fast approaching. Every day it leaves the energy and resources sector without a clear framework is another day that investment decisions must be made in a policy vacuum and another day in which no solution is offered to limit the rapidly increasing electricity price rises being felt across Australia.

The energy area is one of the most significant areas not only because of the price that the community pays for electricity but also because it is the basis of our economic development. There are a number of members of this House who are watching development in the onshore petroleum industry, particularly the coal seam industry, with great expectation. There are a number of members who have manufacturing industries in their electorates, all of whom are sitting and waiting for some definitive policies in relation to energy from this government.

While we as an opposition provide our constructive support where we can, and we do on these bills, we need to see some action from the Gillard government if this country is to have the confidence to make the investments that will see not only the exploration of oil and gas continue but also the development of onshore industries and, most importantly, the continued development of baseload clean electricity generation in Australia.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I join the debate here this evening on the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. The purpose of these two bills is to make minor policy and technical amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003.

Listeners to this debate will not be surprised to hear the parliament discussing these measures to improve the safety of offshore oil and gas wells, their structural soundness and ways to make the regulation of the industry more efficient and effective. We have already seen a huge expansion in exploration and drilling activity off our coast as companies seek to unlock the enormous reserves of natural gas and, to a lesser extent, oil from the seabed. This will only continue and accelerate, as the demand for Australia’s abundant energy resources shows no sign of abating. Alongside these important industries is the emergence of technology to capture and store carbon dioxide in geological formations under the seabed as a means of reducing Australia’s carbon emissions. This has been recognised by the amendment in the previous parliament of the offshore petroleum legislation to include regulation of carbon storage. I certainly join the shadow minister, the member for Groom, in calling on all sections of the resources industry in this country to get on board in the development of the carbon capture and storage industry.

The projected phenomenal growth of these industries is one reason for the government to be focused on the regulatory regime that underpins the sector. The other reason is obvious to anyone who has switched on a television or read a newspaper in the last six months and seen the images of devastation coming from the Gulf Coast of the United States. Oil spilled into the waters off Alabama, Louisiana and Florida for 87 days at an estimated rate of 60,000 barrels a day. The unprecedented environmental damage caused by the explosion on BP’s Deepwater Horizon drilling rig has reinforced the need for all governments to be vigilant in the regulation of their offshore oil and gas industries.

Even before the Deepwater Horizon catastrophe in America, this government had already taken steps to apply the lessons coming out of the commission of inquiry which followed an underwater leak from the Montara drilling platform in the Timor Sea. The growth of the oil, gas and carbon storage activities in some of Australia’s most untouched and sensitive ocean environments places an enormous responsibility on all governments, but it is becoming increasingly apparent that it is the responsible Commonwealth minister who carries the political responsibility for the offshore industries and it is correct that this parliament, the federal parliament, consider these improvements to our regulatory regime.

These bills make a number of changes including: funding the establishment of a National Offshore Petroleum Regulator, NOPR; strengthening the functions of the National Offshore Petroleum Safety Authority, NOPSA; clarifying the operation of the titleholder provisions in situations of multiple titleholders; increasing the effectiveness of compliance through the application of strict liability to appropriate offences; and restoring the original policy intent by clarifying that a titleholder’s duty of care under the occupational health and safety provisions relates only to wells.

It has been the government’s intention for some time now to establish a new National Offshore Petroleum Regulator to commence on 1 January 2012. This initiative was recommended by the Productivity Commission following its inquiry into the regulatory burdens on the oil and gas sector. The national regulator was seen as a means to remove unnecessary duplication and to provide greater consistency in regulation across the country. It is important to note at the outset that this bill does not establish the National Offshore Petroleum Regulator but it does put in place another important step in its development by providing for an equitable means of funding its establishment. The bill does this by enabling the Commonwealth government to retain registration fees currently collected under the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006.

Until now those registration fees have been redistributed to the states and territories as joint administrators of the regulatory system. This measure was looked at in detail by the Senate’s economics committee, which heard that the retention of fees over just a couple of years will amount to over $20 million for the Commonwealth government to put towards the national regulator. The minister stressed, however, in his second reading speech that he does not anticipate amendments relating to the establishment of the National Offshore Petroleum Regulator to be brought to the House until next year to allow adequate time for the matter to be fully discussed with the states and territories. In the meantime it is prudent to give the industry certainty about the funding mechanism for those set-up costs.

Another part of these bills is the strengthened role of NOPSA. Previously, the states and territories were responsible for the regulation of safety in the offshore oil and gas industry. Following a review in 1999, NOPSA was established and since 2005 it has been the body responsible for regulating occupational health and safety matters that arise from petroleum, gas and greenhouse gas operations in Commonwealth waters. Those responsibilities extended to the structural integrity of facilities and also to wells that are part of those facilities only to the extent to which the structural integrity affects the safety of the offshore workforce at the facilities. Under these amendments, NOPSA’s role is now clarified and strengthened by extending its regulatory function to explicitly include non-occupational health and safety aspects of the structural integrity of offshore facilities.

According to the explanatory memorandum, the proposed amendments have the intent of strengthening the ability of NOPSA to carry out its existing regulatory responsibilities and augment its responsibilities by expressly including oversight of the whole structural integrity facilities including pipelines, wells and well-related equipment. For achieving completeness of this oversight role the amendments include non-OHS structural integrity aspects to ensure complete coverage of this particular function. NOPSA needs to be able to effectively and fully regulate the structural integrity of petroleum and greenhouse gas facilities and wells, even where certain structures such as pipelines and wells may not have people at or near them for extended periods of time. Although these amendments do not extend NOPSA’s role beyond that of an occupational health and safety regulator, it nevertheless represents a step towards a more powerful and centralised regulator. This is a common sense recognition that the structural integrity of any part of a facility, including the well or pipeline, is an OHS matter as it is essential to the health and safety of any work crew that might have to work on those remote parts of the facility at some point in time.

The next set of amendments in part 4 of the bill will amend various offence provisions in the act to make the offences ones of strict liability. This again strengthens the regulatory regime and makes the job of the regulators in enforcing the laws more realistic. As they currently stand, the offence provisions in question require intent to be proved in order for a prosecution to be successful. As the explanatory memorandum points out, given the remote and complex nature of offshore operations and the prevalence of multiple titleholder arrangements, it is extremely difficult to prove intent on the part of any party. To date, this has left these particular offence provisions largely unenforceable. The intention of the application of strict liability is to improve compliance in the regulatory regime. NOPSA will no longer be required to prove what a titleholder did or did not intend to do with respect to a safety function but merely that a certain action took place or failed to be undertaken. The liability then follows from the proof of that fact, regardless of fault or intent on the part of the titleholder. After the Deepwater disaster in the US, we all appreciate the importance of regulators having the power to rigorously follow through on the regulations that protect the safety of workers and the state of our environment.

This bill will also clarify the situation when a title is held in conjunction by two or more titleholders, as is common in many offshore ventures. This amendment clearly provides that when two or more titleholders are jointly responsible for the administration of a facility then one can be nominated to act in the interest of all parties. Effectively this means that where the act imposes an obligation, the obligation is imposed on each and every titleholder in the consortium but can be discharged by any one of the titleholders. With this amendment, there will be one titleholder, one contact, to represent the interests of the joint titleholders. The act will now ensure that a single titleholder can be responsible for its applications, requests, nominations or notices. This amendment will reduce the complexity that existed in the previous act—complexity which has previously frustrated the government, industry titleholders and the NOPSA—and instead produce a more manageable and more efficiently functioning industry. This amendment does not seek to diminish the legal responsibilities of the titleholders. These will remain unchanged. The amendment does, however, seek to create a designated contact for each facility in order to streamline procedures.

The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 also includes a section that corrects the definition of a titleholder’s occupational health and safety responsibilities. The current act contains a titleholder duty of care in relation to facilities. That reference to facilities is in fact broader than was intended and could have the consequence of making the titleholder responsible for facilities such as drill rigs over which the titleholder has no direct responsibility or control. Hence, this amendment makes it clear that the titleholder’s occupational health and safety responsibilities are narrower than that and relate to wells rather than facilities in general. The duty of care does, however, extend to all aspects of well design, construction, maintenance and operation.

The second bill that we are debating this evening is the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. This bill provides transitional arrangements to ensure that appropriate levies may be collected for pipelines in designated coastal waters. An amendment in 2009 removed references to pipeline safety management plans and safety plan levies. Instead it introduced a safety case levy that includes pipelines. This amendment will provide transitional arrangements to allow the states and territories further time to amend regulations under their petroleum legislation to reflect these changes made by the Commonwealth.

The offshore oil and gas industry is undergoing enormous growth and will continue to underwrite Australia’s prosperity for many years to come. Through this legislation the government is continuing to refine the regulatory framework by which the industry is supervised and administered. The regulation of the industry needs to be strong because of the high stakes involved in terms of potential harm to workers and to the environment. A clear message has to be sent to companies operating in this sector that there can be no cutting of corners on occupational health and safety or environmental protection. At the same time the regulatory scheme needs to be made as efficient as possible and constantly updated and streamlined to keep up with developments in this burgeoning industry. This legislation gets that balance right and deserves the support of all sides of the parliament.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise to address the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 together with the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. These bills will make changes to the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 to establish transitional arrangements. These will run from 1 January 2010 to 31 December 2012 and will allow for the Commonwealth to collect safety case levies in designated coastal waters. These bills will also allow a safety case to be enacted for a facility that has a pipeline in designated coastal waters and will allow the states and Northern Territory to enact provisions in their respective legislations to reflect these national changes.

These bills are especially pertinent to my constituents in the electorate of Paterson. Currently Advent Energy is preparing to start exploratory drilling for natural gas off the coast of New South Wales. That includes drilling just 10 kilometres off the coastline and into my electorate at Port Stephens from next month. According to the geophysical site survey, Advent Energy will test four locations, each with an area of about nine square kilometres. Location 1 is at 32 degrees 55 minutes latitude, 152 degrees 22 minutes longitude. Location 2 is at 33 degrees eight minutes latitude, 152 degrees five minutes longitude. Location 3 is at 33 degrees nine minutes latitude, 151 degrees 54 minutes longitude. Location 4 is at 33 degrees 25 minutes latitude, 151 degrees 42 minutes longitude. If successful, the exploration could lead to a sizeable offshore gas extraction project within the next decade. Reserves are currently valued at approximately $50 billion. Advent Energy has secured its exploration permit under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, one of the very acts that this bill seeks to amend.

In particular, as I have mentioned, one of the functions of this amendment will be to help ensure that the safety authority can collect levies to fund its safety operations. The authority plays an important role in enforcing Australia’s safety laws and ensuring that private companies comply with all the relevant legislation. I was able to witness this role firsthand during my personal experience with the National Offshore Petroleum Safety Authority a year from its inception on 1 January 2005 because I was the Parliamentary Secretary to the Minister for Industry, Tourism and Resources from 2006 to 2007, with responsibility for NOPSA. Utilising the higher safety standards needs to be absolutely paramount during future gas drilling and pipeline projects.

After all, much of Australia’s way of life is built around the beauty and health of our beaches, oceans and marine life. Industries such as tourism also rely heavily on the quality of our coastline. It is therefore central to the greater national economy. Indeed, one of the things I love most about living in the electorate of Paterson is being able to go to the beach, have a swim, do some fishing. I truly believe that we have some of the best coastal spots in the whole world and that is why it is vital we protect our coast. Importantly, this is a matter for all levels of government, as the act is administered by both federal and New South Wales government authorities. Local councils also play a large role in coastal management and will therefore be impacted by legislation relating to our seas.

Unfortunately, gas pipelines do pose some environmental threats. Those threats involved in Advent Energy’s proposal off Newcastle have been detailed in a confidential report to the New South Wales government. However, despite the fact that this is the first project of its kind off New South Wales, the state Labor government has refused to make the details public. I am a firm believer in consultation and making decisions with all of the information available. Proper research and science, combined with advice from local people who know their local area, are the only way to truly make a decision in the best public interest. It is for this reason that I would urge the New South Wales government to immediately release the confidential report to my constituents.

In the meantime I look to the information which has become publicly available. An article in the Newcastle Herald by Damon Cronshaw published on 11 October reads:

A confidential report on an exploratory gas drilling project off the coast of Newcastle has revealed the proposal’s potential environmental risks, including the possibility of oil spills.

The NSW Government refused to release the report, saying it did not have to be made public under Commonwealth law.

But the Newcastle Herald has obtained a copy, which details the plan’s potential risks to the environment and the possibility of an oil spill.

The article goes on to list a number of environmental risks and potential effects of Advent Energy’s projects. Those include an oil spill that will last for up to 11 weeks; a whale collision which would threaten workers’ lives; physiological damage to the sensitive marine fauna from underwater noise; chemical, oil and diesel spills which would have a toxic effect on marine organisms; and discharges 15 to 20 degrees above ambient sea temperature, which would dramatically impact on marine life .Obviously, these issues are deeply concerning to my constituents in Paterson. As a former dive operator and keen offshore fisherman myself, I am also committed to the importance of marine protection and biodiversity.

The Executive Director of Advent Energy, David Breeze, was quoted in the Newcastle Herald in the aforementioned article as saying that the company was ‘very confident the risks are being adequately addressed’. This may very well be the case; however, without seeing the report my community is unable to make an informed decision. I myself have not been invited to any consultation sessions despite being in the immediately affected area. However, I am in the process of seeking an invitation to any further community consultation forums.

I found it important today to note my concerns with offshore gas drilling projects and the lack of transparency currently being executed by the New South Wales and Australian Labor governments. However, it is important for me to also note that I am not opposed outright to gas drilling. This is because, if executed correctly, natural gas projects present a number of opportunities both in New South Wales and across the nation as a whole.

The use of gas as an energy source certainly has potential to benefit our environment and I support the moves to broaden Australia’s energy sources. Certainly, the Australian community has become much more aware of its contribution to greenhouse gases and is keen to limit the impact on the environment. You have only to take a look at the take-up of solar power, recycling programs and gas hot water systems to see that people are keen to do what they can to be more environmentally friendly.

Of course, the coalition and the Gillard Labor government are deeply divided about the best way to limit Australia’s carbon emissions. The coalition has advocated an incentives based approach which educates people and rewards them for reducing carbon emissions. The Gillard Labor government, on the other hand, seems to think that the big new tax will somehow get the Australian public to look after their environment. So, while our methods deeply vary, we are united in the opinion that we have been blessed with an amazing part of the world and we should be taking care of it in the best way we can.

It is therefore important when assessing the future of natural gas to consider its advantages. For example, natural gas produces approximately 65 per cent fewer emissions than brown or black coal. On top of that, it also has fewer contaminants than coal or oil. Thus, natural gas has the potential to play an important role in the future energy needs of New South Wales, which currently relies most heavily on coal-fired power stations. The Keneally state Labor government has itself called on private companies to invest more in gas projects and has approved plans for two new gas-fired power stations.

Clearly, Australia’s governments are moving towards the use of natural gas, but that is not the issue. The issue here today is the safety of the gas projects and ensuring the safety authority has the tools it needs to protect our seas—the ocean floor, shore line and marine life. I am convinced that the only way to achieve it is to make sure that the process is open and transparent.

As the member for Paterson, it is my job to represent the views of my constituents. However, unless my constituents have all of the tools to form their own opinions and conclusions, I simply cannot do so. That is why I am here today echoing their calls for more information on offshore drilling and the safety processes in general. One letter I received from a constituent detailed a meeting held by the community in Boat Harbour on this issue. It was attended by more than 100 people. The main concern at the meeting was the lack of consultation by state and federal Labor governments regarding the offshore drilling legislation.

In the last couple of months I have also spoken with a number of people regarding the future of offshore drilling and safety measures involved. As a part of these talks, many of my constituents have mentioned the Gulf of Mexico BP oil spill, which occurred earlier this year. It has now become known as the biggest offshore oil spill in US history. Of course, this event was extraordinary. It devastated marine and bird life and resulted in large quantities of water being completely overtaken by oil. It has cost billions of dollars and the long-term effects will not be known for some time to come. Its impacts have been widely reported in news items across the globe.

Still being so fresh in people’s minds, and with offshore drilling such a new concept for many residents in New South Wales, there is a definite feeling within my electorate of Paterson that we too could be faced with a similar reality if safety is not paramount in future drilling projects. Similar fears were detailed in a report by the Newcastle Herald on 13 October, listing four scenarios that could cause an oil spill as part of Advent Energy’s exploratory drilling using the Ocean Patriot drilling rig. These four scenarios are a refuelling incident, collision, subsea blow-out, and subsea rupture. The Port Stephens Examiner also detailed local concerns in an article by Nikki Taylor published on 13 October. I quote:

Port Stephens Council is to have an input on the NSW government-sanctioned committee to oversee exploratory drilling off the coast.

With drilling expected to get underway off the coast of Boat Harbour next month, there has been a growing concern from environmental groups and affected councils. The drilling project, conducted by Asset Energy, could lead to a significant offshore gas extraction project valued at $50 billion.

Concerns have been raised that drilling could have a negative impact on migratory and threatened species including marine turtles, whales, sharks, fish and birds.

As well, one of the reports raises fears about a potential threat from oil spills.

Earlier this year both Wyong and Gosford councils raised concerns with Gosford strongly objecting to the plans because there have been no social, economic or environmental assessments carried out. Port Stephens general manager Peter Gesling said the council had only in the past few weeks been asked to become a part of the consultative committee.

“The council has no authority over this project, we can however offer our view to the state government who will consider them along with other community and industry concerns,” he said.

Nelson Bay-based environmental group Econetwork has confirmed its opposition to the venture.

“We expressed to the minister in August 2008 that we were appalled by the audacity of the application,” group secretary Darrell Dawson said.

Without more information on the likelihood of these events and the contingency plans created by Advent Energy, we simply do not have the tools to allay such fears to the level demanded and deserved by our community. We also open ourselves up to a scare campaign which could undermine the very safety activities currently being promoted by the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill.

I support moves to increase the success and activities of NOPSA, which is sure to play an increasing role in the natural gas industry. Continued funding for the safety authority therefore needs to be protected through appropriate levies. However, just as the federal government has placed its focus on compliance activities, Prime Minister Gillard must also ensure that public education does not lag behind. Offshore gas projects look certain to increase in number and the community deserves to know what that means for our coast and what it means for the future of power supply in the country. As I said, I am not opposed to this project; I am actually opposed to the lack of information being provided to the community. It is incumbent upon Advent Energy and the state and federal governments, which substantially will be rewarded from this project, to embark on a process of public consultation and education. Failure to do so will only build deeper and stronger community resentment of this project, a project which is likely to create hundreds of jobs in my community and bring an enormous amount of investment into Australia.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

Today I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. Before I do so may I congratulate you, Mr Deputy Speaker Georganas, on the very strong endorsement of you by your community at the 2010 federal election.

This amending legislation, I believe, is very important not only for my part of the world, Corangamite, but also for many other parts of regional Australia. These bills will make minor policy and technical amendments to the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003. It will improve the ability of the National Offshore Petroleum Safety Authority, the regulator in this area. The Montara Commission of Inquiry and the recent events in the Gulf of Mexico have moved the Australian government to improve the regulation of petroleum operations and I think that is very wise indeed.

There will of course be no adverse effect on industry and there will be no extra costs to industry, and that is also very important. This legislation will also simplify the safety regime for titleholders and will make titleholders accountable when necessary, as spelt out by these bills. This legislation will remove direct responsibility from a titleholder for facilities which it has no direct control over. This legislation will not adversely affect any regional people. That is great for my electorate of Corangamite, which is in regional Victoria. This industry is a very important component of my regional economy and of many other regional economies across this region.

These bills will go a long way to making this industry safer, and that is excellent news for regions like mine that of course do provide substantial income to the national economy. This industry is very important in many parts of the country. Within my electorate I have, just offshore, the Otway Basin, which is a very important gas production area in south-eastern Australia, and it provides a very substantial volume of gas to Australian markets.

Indeed, as at December 2009, the Otway Basin’s petroleum fields provided a very substantial volume of gas to the market. Some 23.4 per cent of eastern Australia’s conventional gas production came from my part of the world. This equated to some 1,197 petajoules, which equates to some 17.8 per cent of Victoria’s conventional gas reserves, a very substantial volume and a very substantial economic asset for our part of the world. The basin also produced some 3.5 per cent of eastern Australia’s total gas reserves and some 3.1 per cent, 70,000 tonnes, of Australia’s liquefied petroleum gas, LPG—again, very substantial components. The basin also produces a small amount of condensate, some 708,000 barrels, or 1.2 per cent, of Australia’s production. This is a significant contribution from my region and it is a very important industry—an industry that will grow and develop over time.

The Otway Basin has three major gas projects which all transfer offshore gas to onshore treatment for processing and distribution. The largest development in the Otway Basin is the Otway Gas Project. It is a $1.1 billion development some 70 kilometres south of Port Campbell. We need to encourage these industries because these industries will not only help to significantly grow my local economy but also grow many regions such as the Geelong region as we move forward.

I also have some very significant natural resources within my seat. I have the Great Ocean Road, the Surf Coast and the Bellarine Peninsula. If we do not get regulation in these areas correct and we have oil spills such as Montana or the disaster that took place in the Gulf of Mexico then that would place very significant pressure on my seat and on many other areas in Australia that often have very significant tourism related activities. That is why we need to have strong regulation in these areas. I congratulate the Minister for Resources and Energy on ensuring that we do have strong regulation that takes account of the very significant risks that do occur within this industry. Tourism is also a very significant job producer within my area. That is why we need to ensure that the offshore petroleum industry can deliver its product to market safely and that the right mechanisms are put in place to protect our very significant regional economies.

As I mentioned earlier, offshore petroleum is becoming a very major part of the economy and a major employer within my electorate—and I know it also is within many other parts of regional Australia. We need to make sure the wells and the overall industry are safe and have the right amount of regulatory oversight and protection. This will have a direct benefit for the workers in the industry and I think it is also a step in the right direction in growing our regional economies. For these reasons, the minister has taken the responsibilities of the offshore oil and gas industry very seriously. We have a very safe industry and very productive industry. But we also know that there are some very significant risks and we need to ensure that we deal with them. These amendments will give NOPSA the ability to regulate and keep the industry safe.

The intentions of this government are very clear through these bills. These bills will strengthen the role of the National Offshore Petroleum Safety Authority. This is certainly something I welcome, and I am sure most people in this place also welcome it. They will make it clear how the titleholder provisions apply, particularly when there are two or more titleholders. It will also make the titleholder more accountable by making clearer the titleholder’s responsibility under the occupational health and safety provisions of the act. These bills will also arrange safety levies to ensure that the appropriate levies can be collected for pipelines in designated costal waters.

As I mentioned earlier, in my part of the world gas is collected offshore, piped onshore and then processed, so it is important that we have regulation in this area to ensure that that can happen in a safe way. After the Montana oil spill, which was a huge tragedy here in Australia, we needed to make some adjustments to NOPSA’s functions so that it could be more effective and fully regulate the structural integrity of petroleum and greenhouse gas facilities. These amendments do not extend NOPSA’s role beyond that of an OHS regulator but do take it in a step in that direction. The regulator can not witness all wells of any note. The government has toughened some of the offence provisions to ensure that industry take full account of their responsibilities. This will encourage titleholders to inform NOPSA if there are any problems with wells or any other issues.

It is at this point that I would like to place on record the reality that, as we move further offshore and into deeper waters, risks become more substantial. The engineering challenges also become much more substantial and need to be properly regulated and managed. I think these arrangements go in some part to dealing with that as an issue. This all means that a higher safety burden will be placed on the titleholder. I think that is appropriate, particularly with respect to some of the offences already spelt out by the bill.

The Gillard government is very keen to ensure that we have appropriate regulation in place to protect the health and safety of workers, that we have good regulation in place that will protect the environment and that we have good regulation and legislation in place that enables us to take full advantage of our natural resources. As I said earlier, we have very substantial assets in my electorate of Corangamite—and I know many other regional members equally have very substantial assets with respect to oil and gas. For us to take full advantage of that, government needs to take certain measures to ensure that we enable industry to extract it in a way that is safe for workers and the environment.

I would like to congratulate Minister Ferguson for working diligently on these matters over the last few years. I believe the actions that he has taken will enable this industry to grow in a sustainable way that will protect the interests of workers and enable our economy to grow as we take full advantage of our natural resources. I commend the bills to the House.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker Sidebottom, my cousin, it is a pleasure to speak on these bills—the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. You served on the committee, of which I was chair, where we brought down the report Down Under: greenhouse gas storage review of the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill. I note the courage of the minister—Minister Ferguson, who is at the table—who put that groundbreaking legislation before the House Standing Committee on Primary Industries and Resources and allowed that committee of all parties to review it, and I note the hard work that we did to pull together the thoughts of industry, environmental groups and the many different parts of industry that would be dealing with this legislation.

Of course, it was very important that our nation deal with the storage of greenhouse gas. Greenhouse storage has been going on in the world for 40 or 50 years, through the petroleum industry. It is a matter of putting a legislative framework around it in our country, taking into account the importance of our coal industry and our petroleum industry. I am very pleased that we are continuing to refine and pull together the work that was initially done by the minister through his bill and the committee which I had the privilege of chairing. We are always looking at offshore safety and the difficulties that can arise from bad experiences.

This bill was introduced in the last parliament and, because of the election, it is now being brought back into this place. I believe a bipartisan approach is being adopted, which is very important, because the regulation and safety of this industry are matters that we should agree on and should get right. It is so important for our nation. Australia needs to be at the forefront of ensuring there are strict regulations in light of what has happened in other parts of the world and, indeed, in our own waters recently.

The purpose of these bills is to make minor policy and technical amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003. On the back of the Montara Commission of Inquiry and the recent events in the Gulf of Mexico, the Australian government, to its great credit, is trying to improve the regulatory regime covering petroleum operations in line with the terms of the inquiry. Point No. 2 of the report of the inquiry stated that the government would review the adequacy and effectiveness of the regulatory regime applicable to operations at or in connection with the Montara oilfield, including under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, and including the adequacy and effectiveness of all safety, environment, operations and resource management plans, and other arrangements approved by a regulator and in force at relevant times.

It has been apparent for some time that it is the responsible Commonwealth minister that increasingly carries the political responsibility for the offshore oil and gas industry. That is why we need these improvements to the role of the National Offshore Petroleum Safety Authority—to ensure that it can properly regulate the safety of offshore petroleum wells and related activities.

The miscellaneous measures bill will enact the government’s intention to strengthen the role of the National Offshore Petroleum Safety Authority; make clarifications on how titleholder provisions apply where titles are held jointly by two or more titleholders; make clear that a titleholder’s responsibility under the occupational health and safety provisions of the act is for wells, and not more broadly for facilities; and to make some technical amendments to achieve a more enforceable regulatory regime and to update the act.

The safety levies amendment bill provides transitional arrangements to ensure that appropriate levies may be collected for pipelines in designated coastal waters. The government amended the act in 2009, removing provisions that reference pipeline safety management plans and pipeline management safety plan levies and replacing them with a safety case levy that includes pipelines. The current amendments provide transitional arrangements to allow states and territories to amend regulations under their petroleum legislation relating to designated coastal waters so that it reflects the recent changes made by the Commonwealth to its act and regulations. The states and territories have some jurisdiction in this area.

The Montara oil spill made it clear that we needed to augment NOPSA’s functions to ensure that it can effectively and fully regulate the structural integrity of petroleum and greenhouse gas facilities, wells and well related equipment, even where certain structures such as pipelines and wells may not have people at or near them for extended periods of time.

Although these amendments do not extend NOPSA’s role beyond that of an occupational health and safety regulator, this nevertheless represents a step towards a more powerful and centralised regulator. In recognition of the fact that a regulator cannot be everywhere at once, and that it relies on the titleholder informing them of compliance with its requirements and directions, these amendments toughen some of the offence provisions by making them strictly liable where the offences involve an act or omission alone. This means that NOPSA no longer has to prove what a titleholder did or did not intend to do with respect to a safety function, but merely that a certain action took place.

A higher safety burden is therefore placed on titleholders in respect of some offences under the bill. At the same time, part 5 of the miscellaneous measures bill properly assigns to wells the duties of titleholders under the OHS provisions of the act. As it exists, the act could imply that a titleholder has duties in relation to facilities over which the titleholder has no direct responsibility or reasonable control. Under the proposed amendments to the act, the titleholder’s liability is properly assigned to areas that it has control over, such as all aspects of well design, construction, maintenance and operation, rather than facilities in general.

This bill makes a very good contribution to upgrading and putting our legislation in order. When we look at our own problems with the Montara well and also the difficulties in the Gulf of Mexico in recent times—the problems in the wetlands, the social issues for all those people around that area and the economic downturn in the fishing and tourist industries for the United States—we see the need to have very good regimes in place. I commend the minister for getting on with the job, and I support the bill.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I express my appreciation to the House for the constructive manner in which the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009 have been debated. In doing so I extend my particular appreciation for their participation in the debate to the members for Groom, Paterson, Capricornia, Corangamite and Lyons. These bills amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas (Safety Levies) Act 2003. I will clarify some issues about the levies at the outset because they were mistakenly misrepresented by one of the contributors to the debate. The only measures going to levies are the transitional arrangements for the phasing-out of the pipeline and safety management plan levy. There is no proposal to introduce new fees as a result of the House’s consideration of these bills.

There are a number of amendments in the bill that, while comprising only a small part of the legislation as a whole, are nevertheless important. They include the strengthening of the functions and powers of the National Offshore Petroleum Safety Authority to more effectively enforce the safety regime, the streamlining and clarification of provisions in relation to multiple titleholders to benefit regulators and titleholders alike, improvements to enforcement and compliance aspects of the regulatory regime and the clarification of titleholders’ occupational health and safety duties in relation to wells. In essence, these bills underscore the government’s commitment to the maintenance and continuing improvement of a strong, effective framework for the regulation of offshore petroleum and greenhouse gas activities.

During the debate a number of related issues were raised by members, and I seek to respond to a couple of those. The issue of the Montara commission of inquiry, which was conducted by Mr David Borthwick, was raised by most contributors to the debate. I confirm to the House that I received the commission of inquiry’s report on 18 June this year. As I have said publicly on a number of occasions, I remain committed to releasing the report once the Australian government has given proper consideration to its findings and recommendations. Further, I say again that I intend doing that prior to Christmas this year. The House should not forget that the report contains 105 recommendations and 100 findings with wide-ranging implications for government regulators and the offshore petroleum industry. The goal—and I think this is also the goal of all members who participated in this debate—is to ensure that Australia’s oil and gas exploration and production operations are the best and safest in the world. I believe that applying the lessons learnt from an instance of the loss of well control here in Australia at the Montara wellhead platform and another incident in the Gulf of Mexico are vital to achieving that goal.

With that goal in mind, the Australian government is paying heed not only to the Montara report but also to the lessons to be learned from proper consultations with the US administration and BP and other petroleum companies on the incident in the Gulf of Mexico. We as a government, in finalising our response to the Montara report, will continue to monitor closely developments in the US and share information from our experiences with our American counterparts. The government remains very firmly committed to establishing a regulator for offshore petroleum activities in order to provide the community, the government and industry with assurances that all petroleum activities meet world-class standards.

I again indicate that our consultations to date have seen support for the establishment of a national regulator from industry and from all state and territory governments other than that of Western Australia. I am committed, in the finalisation of this legislation, to further consultations with the opposition and to my ministerial counterpart in Western Australia. I think this is important, because in bringing forward our proposed model for the national offshore petroleum regulator we will seek to ensure that we take industry with us and because we remain committed to the establishment of a national regulator by 1 January 2012 to ensure that the petroleum industry meets world-class standards on safety and environmental matters. More than ever, this is in line with the expectations of the Australian community, and it has full industry support.

I turn now to the issue raised by the member for Paterson: the operation of Advent Energy and some potential drilling 55 kilometres east of Newcastle. I remind the House that the discovery of new petroleum reserves has the potential to reduce Australia’s energy import dependence and increase supply certainty. This, to be fair, was acknowledged by the member for Paterson as an objective of the government.

For those reasons, Australia’s offshore petroleum regulatory regime places the onus on the operator to demonstrate that all exploration for and extraction of petroleum resources is undertaken in a safe and environmentally responsible way. That said, all petroleum activities in Australian waters are subject to the stringent environmental standards and reporting requirements set out in the legislation and associated regulations. These clearly include the bills before the House this evening, the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Environmental Protection and Biodiversity Conservation Act 1999. In accordance with these legislative requirements, companies undertaking petroleum exploration and development drilling in Australian waters are required by law to have an approved environmental plan containing an oil spill contingency plan. Some suggest that we should have a moratorium on exploration and development in Australia. I simply say that to adopt that short-sighted approach would undermine Australia’s energy security, and no-one in this debate has suggested that this evening or in the lead-up to the debate.

That in turn takes me to the issue of Advent Energy Ltd. For the information of the House, the permit was granted on 24 June 1999 by the then Howard government. It is held by Bounty Oil and Gas with a 75 per cent stake and Advent Energy Ltd with a 25 per cent stake as the operator through its wholly owned subsidiary Asset EnergyPty Ltd. In July 2010 Asset announced an estimated resource of 13.2 trillion cubic feet. This effectively means prospective gas across the offshore Sydney basin, noting further assessment will be required through well analysis. On 27 August 2010 Bounty advised the Australian Stock Exchange that the exploration well site 55 kilometres east of Newcastle had been finalised. The company has appropriately contracted the Ocean Patriot semi-sub rig obtained from an assignment contract with Apache to drill the well to a depth of 826 metres in water approximately 140 metres deep. The well will test both the Great White and Marlin prospects, which are now considered to comprise the major undiscovered prospective gas reserves across those two prospects.

In line with the requirements of the Offshore Petroleum and Greenhouse Gas Storage Act, the approval of petroleum operations is the responsibility of the designated authority, which also includes the New South Wales department of mineral and forest resources. The well operation management plan for this operation has been lodged with the designated authority for assessment. I remind the House also that the environmental plan includes an oil spill contingency plan, which has also been lodged with the designated authority. My department advises that the New South Wales minister, through his department, is currently holding community consultations on the drilling which has included distribution of the environmental plan to several regional councils.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Who’s the minister?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Mr Whan. I place those facts on the record in response to the constructive manner in which the member for Paterson raised these issues this evening. He clearly indicated he was not about demonising the industry because of its importance from an energy security point of view. I simply remind the House that in terms of exploration and development in Australia we have a very strong regulatory environment which is strengthened by the bills before the House this evening.

The member for Groom also raised the question of carbon capture and storage and its viability. I remind him, as he is actually a significant supporter of the Gorgon LNG project in Australia at the moment, that not only is it the biggest investment in a single project Australia has ever been the beneficiary of but it is also potentially the largest commercial deployment of carbon capture and storage in the world. Clearly in the foreseeable future there will be a change in the energy mix in Australia. I personally expect that we will see a growth in gas and in wind power. I also appreciate that, whether or not the Greens or some environmental NGOs like it, coal is also going to be a significant contributor to energy security in Australia. For those reasons, it is our responsibility to invest in research and development related to the potential commercial deployment of carbon capture and storage, not only with respect to the operation and development of the LNG industry in Australia but also with respect to the operation of coal fired power stations in Australia.

Our responsibility as a nation is not to seek to select the best energy mix but to invest in appropriate research and development activities which enable the market to determine through the appropriate energy mix over time. It is in that context, I remind the House, that we as a government are therefore committed to resolving a price on carbon. Without a price on carbon, there is a lack of certainty for the purposes of investment in capital intensive assets such as those required in the electricity sector. If anyone has any doubts about that, they should speak to the electricity operators in Australia at the moment, because they argue very strongly that without a price on carbon we will be unable to make the necessary investment decisions going to the energy security of Australia in the foreseeable future. New South Wales is a prime example of that, because the last major investments in energy in terms of coal fired power actually occurred under the Wran government. As a result of Neville Wran’s leadership, we have had the benefits of that investment for many decades. The problem now is that, because of the desire for Australia to have a reliable energy system, the gap between baseload and peak energy Australia has been significantly reduced, and over the next three to five years we need to make some very fundamental investment decisions with respect to the electricity sector in Australia.

With those comments, I commend the bills to the House and express my appreciation of the constructive manner in which the members for Groom, Paterson, Capricornia, Corangamite and Lyons approached this debate, because the petroleum sector is fundamental to our economic future in terms of investment, training and job opportunities in Australia in the 21st century.

Question agreed to.

Bill read a second time.